Top 2 Tech & Telecom Stocks You May Want To Dump In August

Two communication services stocks, Lumen Technologies (LUMN) and Imax (IMAX), are flashing overbought signals with RSIs of 77.7 and 75.9 respectively, potentially warning momentum investors. LUMN surged approximately 21% over five days to $5.27 following a new remote production model announcement, while IMAX gained around 13% in the same period to $28.96, despite mixed Q2 results, driven by CEO commentary on strong network growth and market share gains.

Analysis

Two stocks in the communication services sector, Lumen Technologies (LUMN) and Imax Corp (IMAX), are exhibiting technically overbought conditions, which may signal a near-term risk for momentum investors. Lumen's Relative Strength Index (RSI) has reached 77.7, driven by a significant 21% price surge over the past five days to a close of $5.27. This rally was catalyzed by the announcement of a new technology partnership with Pac-12 Enterprises. Despite this sharp upward movement, LUMN's stock price remains substantially below its 52-week high of $10.33, and its Edge Stock Ratings momentum score is a modest 35.29, suggesting the recent strength may be event-specific rather than a sustained trend. Similarly, IMAX shows an overbought RSI of 75.9 after a 13% gain over five days, closing at $28.96 and approaching its 52-week high of $29.66. While the company reported mixed Q2 results, CEO commentary highlighted strong underlying fundamentals including record North American box office, robust network growth with 57 new locations, and market share gains, providing a narrative that supports the stock's momentum despite the mixed headline figures.

Key Decisions for Investors

• Given that both LUMN and IMAX have RSI values above the 70 overbought threshold, investors should be cautious of a potential short-term price pullback or consolidation in both names.
• For Lumen Technologies, it is crucial to assess if the catalyst from the Pac-12 announcement provides a sustainable fundamental uplift or if the recent 21% rally represents a peak to consider trimming positions.
• Investors in IMAX should weigh the strong operational narrative from the CEO against the stock's technical overextension and its proximity to its 52-week high, which could limit further near-term appreciation.
• It may be prudent for those with existing positions to consider taking partial profits to de-risk, while prospective investors might await a more favorable entry point should a technical correction occur.